Iain Duncan Smith back in cabinet to oversee £12bn in welfare cuts

Iain Duncan Smith is to press ahead with his controversial welfare reforms after David Cameron confirmed that the former Conservative leader would remain in the cabinet as the work and pensions secretary.

Downing Street said Duncan Smith would continue with his task of “making work pay and reforming welfare” as the government implements the universal credit reforms and imposes £12bn in cuts on the welfare budget.

George Osborne is considering whether to hold an emergency budget within the next month to set the framework for an autumn spending review in which he will outline the details of the cuts as part of a planned £30bn fiscal consolidation.

The chancellor, who has been given the additional title of first secretary of state by the prime minister, plans to eliminate the budget deficit by 2018-19 by imposing £12bn in welfare cuts, reducing day-to-day government spending by £13bn and raising £5bn from tax-avoidance measures.

Senior Tories had assumed they would not impose the full £12bn in welfare cuts because they had expected to form another coalition with the Liberal Democrats, which vowed to block them.

The confirmation of Duncan Smith’s post comes before a full cabinet reshuffle which will be finalised on Monday. The first Conservative-only cabinet for 18 years will meet on Tuesday. The reshuffle is expected to see the promotion of a number of key women following Cameron’s decision to leave the top four posts unchanged – Osborne as the chancellor, Theresa May as the home secretary, Philip Hammond as the foreign secretary and Michael Fallon as the defence secretary.

Downing Street announced on Sunday night that Lady Stowell of Beeston, the leader of the House of Lords, would be promoted to a full cabinet post on a full cabinet salary. The prime minister faced some criticism after the position was downgraded last year when Stowell replaced Lord Hill of Oareford when he was appointed as Britain’s European commissioner.

Women tipped for promotion include Priti Patel, the Treasury minister, Anna Soubry, the defence minister, and Amber Rudd, the climate change minister. Nicky Morgan has already been confirmed in her post as the education secretary while Michael Gove becomes the justice secretary, to be replaced as the chief whip by Mark Harper. Chris Grayling makes way for Gove and will replace William Hague as the leader of the House of Commons.

Cameron is expected to be given a rapturous reception when he addresses the 1922 committee after exceeding even No 10’s private predictions to win an overall parliamentary majority.

Lynton Crosby, the party’s campaign director, had predicted that the Tories would outperform the opinion polls to win between 300 and 306 seats. In the end, Cameron won 331 seats to become the first Conservative prime minister since John Major in 1992 to win an overall majority and the first prime minister since Anthony Eden to increase his party’s overall national vote share and number of seats.

Cameron will make it clear that he wants to focus on a positive vision of the future. He will tell the 1922 committee: “After the great Labour recession, so much of the last five years was about repair and recovery. It fell to us to put the economy on the right track and to get Britain back to work. Today, I can tell you that the next five years will be all about renewal. It will be our task to renew a sense of fairness in our society – where those who work hard and do the right thing are able to get on.

“We will make sure our economic recovery reaches all parts of our country – and that includes building that northern powerhouse and delivering the infrastructure we need. We will also renew our relationship with Europe, ensuring that we get a better deal for the British people – culminating in an in/out referendum. And we will renew our union – showing respect to all four parts of our country, while recognising we are stronger together as the United Kingdom. All of this goes back to what I said on the steps of Downing Street: we are the party of one nation – and that is the way we will govern.”

The prime minister is expected to say that the chancellor aims to run a budget surplus by the end of the parliament. This means that Osborne and Duncan Smith will have to draw up detailed proposals for the planned cuts.

The work and pensions secretary said the cuts, which are the equivalent of 10% of non-pensioner welfare spending, are possible. However, he says they cannot be achieved through cheese-paring and will instead have to involve changes in behaviour. Duncan Smith has proposed limiting child benefit to the first two children, though the chancellor is wary of this idea on the grounds that it suggests the state wants to discourage large families.

Cameron said during the election campaign that child benefit would eventually be subsumed into universal credit – Duncan Smith’s flagship reform which integrates six benefits. Yet he also said there would be no cuts to child benefit.